Global regulators are racing to catch up with crypto, and the emerging clash over digital asset tax is putting Brazil and South Korea on sharply different paths.
Summary
How is Brazil reshaping digital asset taxation on FX payments?
Brazilian regulators are preparing a new framework to tax digital assets used in foreign exchange transactions, in a move that could significantly tighten oversight of cross-border crypto payments. According to sources cited by Reuters, the proposal directly targets international payments where tokens replace traditional currencies.
The push is being led by the Banco Central do Brasil, which argues that Brazilians increasingly rely on cryptocurrencies to sidestep the existing levy on FX operations, known as the IOF financial transaction tax. Currently, digital asset trades are treated as investment transactions and remain exempt from IOF, even when they mimic currency transfers.
Under the existing regime, holders only pay income tax on capital gains when monthly disposals exceed BRL 30,000 ($5,600). However, two weeks ago, the central bank issued guidance that reclassifies digital asset transfers used in cross-border payments as full FX transactions, effectively pulling them into the IOF net from February.
What will change for international crypto payments in Brazil?
The new guidance does not only cover direct remittances. It also applies to any international payment made with digital assets, including purchases routed through credit or debit cards. Moreover, the move signals a recognition by Brasília that crypto is shifting from pure speculation toward everyday utility in trade and services.
Tax officials say this shift is already visible in the numbers. Brazilians processed BRL 227 billion ($43 billion) in digital asset transactions in the first six months of the year, a 20% year-over-year increase that underscores how quickly crypto is being woven into the financial system.
Notably, investors have pivoted from volatile coins to stablecoins. In particular, USDT accounted for nearly 70% of the BRL 227 billion total, reflecting a strong appetite for dollar-pegged tokens. The central bank believes many users view these assets as a cheaper, faster way to access the U.S. dollar for cross-border trade and savings.
Is Brazil targeting regulatory arbitrage with stablecoin flows?
Authorities are now focused on closing what they see as a widening regulatory gap. One unnamed source told Reuters that the goal is to ensure “that the use of stablecoins does not create regulatory arbitrage vis-a-vis the traditional foreign-exchange market.” In other words, policymakers want equal treatment for equivalent economic activity, regardless of the underlying rails.
However, tax motives also appear to be in play. Other sources estimate Brazil could be losing at least $30 billion in tax revenue annually as importers opt for crypto-based cross-border payments instead of bank-mediated FX transactions. If accurate, this leakage represents a significant fiscal concern for Latin America’s largest economy.
The digital asset tax initiative arrives as the country prepares to implement the Crypto-Asset Reporting Framework (CARF). Brazil’s tax agency has committed to rolling out CARF by July next year, aligning local rules with a global standard designed to curb evasion and improve transparency in digital markets.
How will CARF expand reporting duties in Brazil?
CARF, designed by the Organisation for Economic Co-operation and Development (OECD), obliges participating jurisdictions to collect and automatically exchange tax-relevant information on digital asset transactions. Brazil was one of around 50 countries that, by 2023, had stated an intention to embed this framework into national law by 2027.
With the latest announcement, the Receita Federal do Brasil is moving faster and going further than the baseline OECD blueprint. The tax authority will now treat a wider range of activities as reportable digital asset events, including swaps, staking rewards, airdrops, and transfers between self-custody wallets.
Moreover, the reporting perimeter will extend to offshore virtual asset service providers (VASPs) that serve Brazilian clients, even though this local twist goes beyond the OECD’s generic version of CARF. At the same time, the government plans to lift the digital asset reporting threshold from $5,600 to $6,500, modestly easing the burden on smaller retail users while tightening oversight of larger flows.
Why are experts warning of digital asset tax turmoil in South Korea?
While Brazil works to build a more predictable environment, South Korea faces the opposite problem: a looming implementation deadline and an unprepared ecosystem. Industry researchers warn that the country could slide into serious digital asset tax confusion in 2027.
South Korean lawmakers first approved a 20% levy on crypto-related income five years ago, with enforcement planned for January 2022. However, political and technical concerns led to repeated delays, pushing the introduction first to 2025 and then to 2027 after another two-year deferral was secured by a group of legislators.
These postponements were supposed to give the tax authority and industry time to build systems for valuation, reporting, and enforcement. That said, experts argue that progress has been minimal, raising fears that the country will hit the 2027 date without adequate infrastructure, clear definitions, or robust data-sharing channels.
What are South Korean analysts saying about the 2027 deadline?
“Unresolved issues could spark legal challenges once taxation begins. The deferral period should be used to clarify key definitions and prepare for international data-sharing challenges,” said Park Joo-cheol, a researcher at the Korea Institute of Public Finance, in comments to The Korea Times. His remarks underscore how questions such as what is a digital asset for tax purposes remain contentious.
The debate over crypto taxation has also become deeply political. President Lee Jae-myung’s Democratic Party of Korea came to power earlier this year after campaigning on a promise to defer the levy, turning the measure into a litmus test for youth voters and retail traders.
Moreover, some analysts doubt the 2027 target will hold. Kim Kab-lae, a researcher at the Korea Capital Market Institute, warned that repeated deferrals are becoming normalized, stating that “a fourth deferral can no longer be ruled out.” He added that if public opinion swings toward another delay, tax resistance could become strong enough to imperil future implementation entirely.
What does the diverging approach to digital asset tax mean for global policy?
Taken together, Brazil and South Korea illustrate two diverging approaches to the same challenge. Brazil is accelerating regulation, expanding definitions, and tying crypto closely to traditional FX and global reporting rules. South Korea, by contrast, risks undermining confidence by repeatedly postponing enforcement without resolving structural issues.
For investors, exchanges, and policymakers, these cases highlight how digital asset tax rules are now central to the evolution of both emerging and advanced markets. As cross-border volumes grow and stablecoins become embedded in trade and payments, governments that move early to align fiscal policy, reporting standards, and market structure may gain a regulatory edge over jurisdictions that delay.
In summary, Brazil’s rapid embrace of CARF and its new stance on FX-related crypto payments contrast sharply with South Korea’s uncertain path to a 20% levy, underscoring how taxation will shape the next phase of digital asset adoption.
